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More pay, greater confidence lift U.S. retail sales — but brick-and-mortar chains lag

H&M store window
An H&M store window advertises a sale Wednesday in New York. On Friday, the Commerce Department releases U.S. retail sales data for December.
(Mark Lennihan / Associated Press)

Americans stepped up their auto buying and online shopping in December, reflecting a boost in confidence after the election and a solid increase in pay. 

Retail sales rose a seasonally adjusted 0.6%, following a small 0.2% gain in November, the Commerce Department said Friday. 

Auto sales jumped 2.4% in December, the biggest gain since April. Gas station sales rose 2%, largely because of higher prices. Excluding autos and gas, retail sales overall were flat. 

Still, online retailers in particular reported better sales. Home and garden centers, furniture stores and sporting goods retailers also saw sales grow. 

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The healthy spending was likely fueled by soaring consumer confidence, which has jumped after the election to the highest level in nearly a decade. Small businesses are also more bullish. And Americans’ paychecks are getting fatter: Average hourly pay rose 2.9% in December from a year earlier, the most in seven years. 

The data reflected the ongoing struggles of traditional brick-and-mortar retail chains as Internet merchants gobble up more market share. Department store sales fell 0.6% and electronics and appliance stores reported a 0.5% drop. 

Yet sales jumped 1.3% in a category that mostly consists of online retailers but also catalog companies. For all of 2016, online sales jumped 13.2%, three times the gain of all retail sales. 

Those trends were sharply in focus in the past two weeks as clothing retailer The Limited announced that it would close all 250 of its stores, costing 4,000 jobs. That followed department store chain Macy’s decision to close 68 stores and cut 10,000 jobs. Sears also said last week that it would close an additional 150 stores. 

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Amazon, meanwhile, said Thursday that it would add 100,000 jobs over the next 18 months. 

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